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Four members of the Houston City Council (Martinez, Castillo, Alcorn & Plummer) have proposed increasing the City’s tax rate by 5%. However, as with Harris County’s recent increase, the effect will be significantly higher for homeowners because the average value of homes in the City has gone up, at least according to the Harris County Appraisal District (HCAD).
I have not seen what the average home value increase for the City of Houston is yet but for Harris County it was 4.5%. So, assuming it is something in that range, the proposed 5% increase in the tax rate would result in the average taxpayer’s bill going up by something close to 10%. I’m guessing that most of you did not get a 10% raise last year.
There is a myth that is spread by the advocates for higher property taxes that the property tax cap adopted by Houston voters in 2003 keeps the City from raising taxes above the sum of inflation and population growth. However, the property taxes since the cap was adopted almost tripled. That is primarily because the cap is riddled with exceptions. The biggest exception is that property taxes rebated to the TIRZs don’t count against the cap.
The rationale for the proposed tax increase is because the City will be about $86 million short from balancing its budget this year. Without raising taxes, the City would be forced to, perish the thought, cut expenses. The City’s general fund budget this year is $1.454 billion. So, expenses would have to be cut by a little over 5% to balance the budget without a tax increase.
I have some suggestions in that regard:
1. Cut the one billion dollars in sales tax that the City currently gives to Metro each year. It would take less than a 10% reduction to close the budget deficit.
2. Abolish TIRZs in affluent neighborhoods. The original purpose of TIRZs was to help economically challenged areas to redevelop. Last year, the TIRZs siphoned off over $250 million in property taxes with about $215 million of that coming from the City. About half of those tax dollars went to the Uptown, Downtown, Memorial City, Upper Kirby and Midtown. Do those sound like economically challenged areas to you? By the way, a tax increase means even more money will go to the TIRZs, some of which are riddled with high administrative costs and even some outright fraud.
3. Outsource solid waste pickup. The City’s Solid Waste Department has been a problem for as long as I can remember. It is a very small operation compared to commercial waste collection companies and simply not at a scale that is economically viable. Outsourcing it would save the City money and improve service for the residents.
And that is just off the top of my head.
It is amazing to me that the default position of so many elected officials is to raise taxes without giving even a passing consideration to controlling their expenses. I especially find it ironic that self-described “progressives” are always the first to push to raise property taxes, which is one of the most regressive forms of taxation.
What is particularly disturbing about a tax increase this year, is that it appears that most of the burden of a tax increase would fall on homeowners. That is because, at least according to the Harris County Appraisal District’s preliminary tax roll, home values are up while the value of commercial properties and apartments are down. So, the office building owners in Uptown will pay less in taxes relative to homeowners this year but get more TIRZ money to spend on idiotic projects like the Post Oak BRT.
It is little wonder that the City’s population has been stagnant for the last decade. Were it not for the surge in international immigration in the last few years, the City’s population would have been declining. If elected officials do not wake up and start working to make it more affordable to live in the City, this trend is only going to get worse.